The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

What Types Of Mutual Funds Are There ?

Generally, there are 4 types of Mutual Funds. The four general mutual fund types are Stock funds that buy stocks. Their investment objective is usually specific to a certain stock type such as small cap, large cap, international. Bond funds hold only bonds. As with stock funds, they can be designed to purchase particular grades of bonds. Balanced funds invest in a mix of stocks and bonds. Money market funds usually stick with safe, short-term debt instruments such as commercial paper, banker's acceptances, repurchase agreements and certificates of deposit. They have low risk. They typically provide the lowest returns among mutual funds. Their main uses are to hold money between investments, hold emergency savings and to save for short-term goals. As of 10/2000, the U.S. has over 7,000 mutual funds.

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